New childcare voucher scheme welcomed by Shropshire accountant

A new childcare voucher scheme due to start later this year will be good news for the majority of employers and their staff, according to a Shropshire-based accountancy firm.

The new scheme will replace the current system to enable staff to save tax and National Insurance by paying a proportion of their childcare costs directly from their wages, but is designed to be easier to administer.

Karen Whitehead, managing director of KEW Accountants and Tax Specialists in Telford, said the feeling among her clients was positive.

She said: “A lot of employers found the current scheme a pain to operate and it quickly became quite complicated for businesses depending on how many staff were eligible.

“Under the new system, the employee sets up their own account and effectively pays a proportion of their wages into a childcare account. The government will then top it up by adding back the tax that would have been paid on that income.

“It’s great for working parents because for every £80 they put in, the Inland Revenue will top it up by £20, so it adds up to significant savings over the course of a year.

“The majority of our clients are welcoming the change because it’s one less thing for an employer to do – for some smaller companies that are labour intensive, say with half of their 40 staff claiming childcare vouchers, it can be hard to deal with.

“Staff at firms which do not currently operate a childcare scheme will be particularly pleased because at the moment you can only take advantage of tax-free childcare if your employer operates a scheme.

“We are urging all of our clients to make sure their staff are aware of the forthcoming changes because it’s important that everyone who is eligible has the opportunity to sign up.”